Sumner Redstone Unloads Midway Holdings

We can argue whether or not the interactive entertainment is recession proof or not, but the bad economy is certainly affecting companies in the sector in a very bad way. A good example of this is what is happening at Midway, according to published reports in the Wall Street Journal and Seeking Alpha. According to those reports, Midway’s largest shareholder, Sumner Redstone, has sold all of his holdings in the company to a private investor. That individual, Mark Thomas, has reportedly agreed to buy Redstone’s 87 percent stake in Midway for approximately $0.0012 a share, or $100, 000.

What this all means is unclear, but the bad economic climate has put Redstone’s National Amusements Company in deep financial trouble. That company, which also holds a controlling interest in CBS (which owns GameSpot) and Viacom (which owns MTV and in turn Harmonix), will realize a 2008 tax loss of more than $800 million from the sale of its Midway holdings. Redstone has already unloaded some of his holdings in the aforementioned companies as he tries to pay for $1.6 billion in debt – half of which apparently has to be paid off by year’s end.

Meanwhile, Midway announced this morning that it has received a notice from the New York Stock Exchange (NYSE)that it no longer meets the criteria to be listed. On November 24, 2008, the company received notification from NYSE that it has fallen below the standard for continued listing of its common stock on the NYSE - NYSE requires a minimum average market capitalization over a 30-day trading period of at least $75 million and a minimum stockholders’ equity of at least $75 million. The company has 45 days to get its ducks in a row.